SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 26, 2000
PANGEA PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Colorado
(State or Other Jurisdiction of Incorporation)
0-29585 76-0635938
--------- ----------
(Commission File Number) (IRS Employer Identification No.)
6666 Harwin Drive, Suite 545, Houston, Texas 77036
-------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(713) 933-0374
(Registrant's Telephone Number, Including Area Code)
SEGWAY II CORP.
4400 ROUTE 9, 2ND FLOOR
FREEHOLD, NJ 07728
(Former Name or Former Address, if Changed Since Last Report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Pursuant to a Stock Acquisition and Reorganization Agreement (the "Acquisition
Agreement") effective April 26, 2000, Pangea Petroleum Corp., a Colorado
corporation (the "Company"), acquired one hundred percent (100%) of all the
outstanding shares of common stock ("Common Stock") of Segway II Corp., a New
Jersey corporation ("Segway"), from RGR Corp. and Robert Jaclin, together
representing all of the shareholders of issued and outstanding common stock of
Segway, for $75,000 and 5,000 shares of $.001 par value common stock of the
Company (the "Acquisition").
The Acquisition was approved by the unanimous consent of the Board of Directors
of Segway and the Company on April 26, 2000. The Acquisition is intended to
qualify as a reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended ("IRC").
Upon effectiveness of the Acquisition, pursuant to Rule 12g-3(a) of the General
Rules and Regulations of the Securities and Exchange Commission (the
"Commission"), the Company elected to become the successor issuer to Segway for
reporting purposes under the Securities Exchange Act of 1934 (the "Act") and
elects to report under the Act effective April 26, 2000.
As of the effective date of the Acquisition Agreement, Segway shall assume the
name of the Company. The Company's officers and directors will become the
officers and directors of Segway. As of the Effective Date, Mr. Anslow shall
have resigned as an officer and director of Segway.
No subsequent changes in the officers, directors and five percent shareholders
of the Company are presently known. The following table sets forth information
regarding the beneficial ownership of the shares of the Common Stock (the only
class of shares previously issued by the Company) at April 24, 2000 by (i) each
person known by the Company to be the beneficial owner of more than five percent
(5%) of the Company's outstanding shares of Common Stock, (ii) each director of
the Company, (iii) the executive officers of the Company, and (iv) by all
directors and executive officers of the Company as a group, prior to and upon
completion of this Offering. Each person named in the table, excluding Cede
&Company, has sole voting and investment power with respect to all shares shown
as beneficially owned by such person and can be contacted at the address of the
Company.
NAME OF SHARES OF
TITLE OF CLASS BENEFICIAL OWNER COMMON STOCK PERCENT OF CLASS
- ------------------------------------------------------------------------------
Common Kendall Dorsett 5,643,800 25.93%
Roland Fink 4,375,600 20.10%
Cede & Company(a) 3,332,332 15.27%
Patricia Cudd 2,088,000 9.59%
Rhea Laws 1,895,000 8.71%
David H. Lennox 300,000 1.38%
Charles B. Pollock 0 0
Karen L. Cloud 0 0
DIRECTORS AND
OFFICERS AS A
GROUP 300,000 1.38%
(a) Cede & Company is a holding company for private investors. Cede & Company
does not hold any shares of the Company's Common Stock for the benefit of any of
the Company's officers or directors.
The following is a biographical summary of the directors and officers of the
Company:
CHARLES B. POLLOCK, 60, has been the Chairman of the Board and Chief Executive
Officer of the Company since June 1999. From January 1994 to September 1995, Mr.
Pollock was President of Praxair Indonesia, an industrial gas company where his
responsibilities were those as Chief Executive Officer of such company. From
October 1995 to August 1996, he was manager of Praxair, Inc., an industrial gas
company. His responsibilities included strategic marketing and competition
analysis. From September 1996 to May 1999, Mr. Pollock was self employed as a
consultant in which his projects included the acquisition and sale of
businesses, competitive analysis and strategic marketing. Mr. Pollock received
his Bachelor's of Science degree in 1962 from North Carolina State University,
his Master of Science degree in Ceramic Engineering from North Carolina State
University in 1968 and his Ph.D in Material Engineering from North Carolina
State University in 1972.
DAVID H. LENNOX, 63, has been the President of the Company since January 5,
2000. Mr. Lennox has over 20 years management experience in the construction
industry. Since January 1976, Mr. Lennox is President of Legend Construction
where his responsibilities include the day to day operations of such company.
Mr. Lennox received his Bachelor's Degree from Lehigh University in 1962 and his
Masters of Science Degree in Operations Research from Lehigh University in 1966.
KAREN L. CLOUD, 43, has been Secretary of the Company since July 1999. From 1986
to 1999, Ms. Cloud was an Administrator at Praxair Inc. where her
responsibilities included computer development, accounting manual development,
web development and travel coordinator.
The Directors named above will serve until the next annual meeting of the
shareholders of the Company in the year 2001. Directors will be elected for
one-year terms at each annual shareholder's meeting. Officers hold their
positions at the appointment of the Board of Directors.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the Acquisition Agreement, the Company acquired one hundred percent
(100%) of the issued and outstanding shares of common stock (Common Stock) of
Segway from RGR Corp. and Robert Jaclin, together representing all of the
shareholders of issued and outstanding Common Stock of Segway, for $75,000 and
5,000 shares of $.001 par value common stock of the Company. In evaluating the
Acquisition, Segway used criteria such as the value of the Company's business
relationships, goodwill, the Company's ability to compete in the oil and natural
gas industry, the Company's current and anticipated business operations, and the
background of the Company's officers and directors in the oil and natural gas
industry. No material relationship exists between the selling shareholders of
Segway or any of its affiliates, any director or officer, or any associate of
any such director or officer of Segway and the Company except that Richard I.
Anslow, the majority shareholder of RGR Corp., is the principal of Richard I.
Anslow & Associates who was legal counsel for the Company until it resigned as
legal counsel for the purposes of avoiding a conflict of interest to effectuate
the Acquisition Agreement. For the purpose of filing this Form 8-K and
subsequent to the effectiveness of the Acquisition Agreement, Richard I. Anslow
& Associates will resume as legal counsel of the Company. Segway II was formed,
and RGR Corp. became a shareholder of Segway, prior to being retained as legal
counsel by the Company. The consideration exchanged pursuant to the Acquisition
Agreement was negotiated between Segway and the Company in an arm's-length
transaction. The consideration paid derived from the Company's cash on hand and
treasury stock.
Company. Pangea Petroleum Corporation is a publicly trading company listed on
the OTC Electronic Bulletin Board under the symbol PAPO). The company is in the
business of producing oil and natural gas from proven reserves. It is not in the
business of exploring for unknown deposits of these materials. The Officers and
Directors of the Company are familiar with and understand the petroleum
business. The Company structure will remain small through the use of carefully
selected consultants, contractors and service companies.
Pangea Petroleum will use capital and established proven technology to create
value by generating significant production from proven reserves that are of
little interest to the major companies in the industry. Initially, the Company
will focus on mature petroleum provinces in the United States that have adequate
production and distribution infrastructures. In most cases, the Company will
invest in projects to a sufficient degree to maintain decision-making control
while leaving routine operating responsibility in the hands of competent
partners and/or contractors. The Company will market it products through a mix
of short and long term contracts to assure a reliable revenue stream and hedge
marketing to flatten the swings in energy prices. Producing properties will be
resold after enhanced production is established as appropriate to establish and
maintain maximum asset value.
Pangea Petroleum Organization. The Company is headquartered in Houston, Texas,
and maintains all business functions in the Houston area. Primary corporate
functions include business support, financial control, technology, production
and technical support.
The group working with the financial control function will identify capital
resources required to support the strategic goals of the Company. This office
will also be responsible for human resources, planning, and other ordinary
Company functions. The financial control department will report to the Chairman
and will control all of the Company finances and coordinate with corporate
financial control. The department will be responsible for payables, receivables
and financial planning. Technology is responsible for identifying and qualifying
products, services, and systems required to support the petroleum production
business. It will take the lead in selecting and qualifying contractors,
consultants, and service companies required for the implementation of the
Company's business plan. Finally, it will stay abreast of technology changes on
the outside that will impact Pangea.
Production will control the production of petroleum products. It will work with
partners and contractors to ensure optimum production at all times. Production
will also take the lead in marketing all produced products. Technical support
will be responsible for initial start up of new projects in conjunction with
technology and production. It will serve in a coordinating role on all projects.
Additionally, it will be the primary interface between service providers and the
rest of the Company. It will approve all production plans and monitor
implementation.
Revenue Model. Revenue potential and asset enhancement will be the guiding
principal for all Company investments. Projects will be selected and developed
in a manner that will minimize capital required and maximize the utilization of
existing production and collection infrastructure and geologic data. The Company
will try to minimize risk by producing from known reserves first and then
producing from other reserves made available by workovers and other established
techniques. Revenue streams from product sales will be enhanced by the careful
selection and priorization projects based on the above listed criteria.
Pangea Petroleum intends to become a significant industry player by capturing a
disproportion share of available revenue from key energy investments and
maintain financial strength by developing a strategic mix of saleable products
(oil and natural gas) that are marketed in a manner to minimize the fluctuations
common to the energy marketplace. The planned mix of investments will support a
predictable, growing revenue stream from product sales and augmented by income
from the sale of enhanced productive properties.
The key financial assumption in the Company's business plan is that a
significant number of attractive energy investments will continue to be
available for purchase and appropriate technology will be available through
service companies and consultants to develop these properties.
Pangea Petroleum will create value in three ways. First of all, the Company will
develop a market leading position in the identification and exploitation of
under-producing oil and gas reserves in established energy provinces such as the
State of Texas. Using a judicial mix of current, proven technology, and capital
will produce the reserves. First-rate service companies that have been selected
from an approved group of merit-based companies will implement approved
projects. Revenue streams will be maximized by carefully marketing the products
through a combination of spot and contract sales and in some cases product sales
will be hedged.
The second major thrust for value creation will be the enhanced asset value
realized from the development of the under-utilized reserves acquired by
purchase. These reserves can frequently be produced for a number of years and
then re-sold in the market place for greater value because of enhanced
production and timing.
The final thrust will be the formation of strategic alliances and partnerships
that will enable Pangea Petroleum to play a greater role in the development of
older reserves than it could achieve on its own. These partnerships might take
the form of jointly owned reserves, production sharing agreements with service
companies in return for production guarantees, or some combination of these and
other shared business arrangements.
The Pangea Petroleum organization will fully utilize strategic marketing to
fully implement its business plan. The Company will select a strategic marketing
consultant to guide the company through this process.
Pangea Petroleum intends to become a significant participant in select market
niches in the energy industry. The niches include the development of under
producing oil and natural gas reserves with capital and technology, the resale
of improved and re-packaged producing properties and participation in the final
production stage and disposition of select offshore projects. We will create
value for our shareholders by leading the market in our niches and maintaining a
strong financial base. We will use strategic marketing to stay ahead of the
curve in our industry.
Industry. The petroleum industry is a global industry that is fundamental to all
economic activity. It is composed of the down stream sector (refining,
marketing, products and derivatives) and the upstream sector that is focused on
finding and producing crude oil and natural gas. Oil and natural gas are
commodities that are found throughout the world and they have been produced in
increasing quantities since the mid 19th century. The exploration, production
and transportation of these materials in the modern era generate an enormous
appetite for capital because quantities sufficient to fuel the world's economic
machine are rapidly becoming more difficult to find and expensive to produce.
Consequently, a few global corporations and state energy companies dominate the
industry. These companies tend to concentrate their investments on very large
prospects and to quickly abandon less productive, older reserves.
The technology of producing oil and natural gas has improved tremendously but
significant quantities of these materials are never produced from the typical
reservoir. Increased capital and technology are almost always required as the
reserves are produced in order to maintain an economic level of production. In
many cases older fields have been abandoned with significant reserves still in
place because the owners did not have access to capital and technology, but
chose to deploy their resources in more prolific areas or the field was not
accurately analyzed so that appropriate technology could be deployed.
Practically all major oil companies in the United States are walking away from
mature, productive fields (onshore and offshore) because they wish to deploy
their capital to frontier areas with greater potential.
Mature energy provinces such as the United States have many productive fields
with production and collection infrastructure in place that can be purchased.
The infrastructure represents a significant required investment if production is
to continue. These fields offer investment potential for those companies willing
to commit capital and appropriate technology. The technology is readily
available from consultants, service companies, and other groups established to
support the petroleum production sector.
This plan will target the petroleum niche composed of fields with proven
reserves that require capital and/or technology in order to enhance or restore
production.
Competition. Pangea Petroleum will be the strongest competitor in its niche by
identifying and utilizing in a timely manner the best, proven technology in the
industry. It will be positioned to quickly analyze and be prepared to invest in
attractive projects that meet its financial criteria. Pangea will differentiate
itself by consistently selecting and investing in projects that produce
attractive returns at a reasonable investment level. Availability of high
quality project data, production infrastructure and environmental safeguards
will be major factors when grading investment opportunities. Risk management
will be a major factor in all of our business decisions.
MANAGEMENT COMPENSATION. The following table sets forth the annualized base
salary that indicates that the compensation for our executives, officers and
directors has not exceeded $100,000 on an annualized basis. We reimburse our
officers and directors for any reasonable out-of-pocket expenses incurred on our
behalf.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL STOCK UNDERLYING
POSITION YEAR SALARY ($) AWARDS OPTIONS
- ------------------ ---- ---------- ------ -------
None
RISK FACTORS
LIMITED OPERATING HISTORY: Although the Company was founded in 1997, its
business plan is newly-organized, in its initial stages of development, and
lacks a substantial prior operating history. The Company's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in early stages of development. Such risks include, but
are not limited to, an evolving and unproven business model and the management
of growth. To address these risks, the Company must, among other things,
maintain and significantly increase its customer base, implement and
successfully execute its business and marketing strategy, respond to competitive
developments, and attract, retain and motivate qualified personnel.
There is no assurance that the Company's business strategy will be successful,
or that additional capital will not be required to continue business operations.
As of April 26, 2000, the Company had limited working capital. The Company has
limited material tangible assets. To date, the Company has not created any
revenues and, as a result of the significant expenditures that the Company plans
to make in sales and marketing, research and development and general and
administrative activities over the near term, the Company expects that it will
continue to incur significant operating losses and negative cash flows from
operations on both a quarterly and annual basis for the foreseeable future. For
these and other reasons, there can be no assurance that the Company will ever
achieve or be able to sustain profitability.
DEPENDENCE ON KEY MANAGEMENT. The Company is highly dependent on the
services of Charles B. Pollock, Chairman and Chief Executive Officer, David H.
Lennox, President and Karen L. Cloud, Secretary. The loss of their services
could have a materially adverse impact on the Company. The Company does not
currently maintain any key-man life insurance policy with respect to any of
these key management personnel.
POSSIBLE DIFFICULTY IN RAISING ADDITIONAL EQUITY CAPITAL. There is no
assurance that the Company will be able to raise equity capital in an amount
which is sufficient to continue operations. In the event the Company requires
financing, the Company will seek such financing through bank borrowing, debt or
equity financing, corporate partnerships or otherwise. There can be no assurance
that such financing will be available to the Company on acceptable terms, if at
all. The Company does not presently have a credit line available with any
lending institution. Any additional equity financing may involve the sale of
additional shares of the Company's Common Stock or Preferred Stock on terms that
have not yet been established.
RISKS OF RAPID GROWTH. The Company anticipates a period of rapid growth,
which may place strains upon the Company's management and operational resources.
The Company's ability to manage growth effectively will require the Company to
integrate successfully its business and administrative operations into one
dynamic management structure.
POSSIBLE ISSUANCE OF ADDITIONAL SHARES. The Company has authorized
50,000,000 shares of Common Stock. The Company presently has outstanding
21,766,231 shares of Common Stock, the only class of stock of the Company for
which shares have been previously issued. As of the Effective Date of the
Acquisition Agreement, the Company will have authorized, but un-issued,
28,228,769 shares of Common Stock which are available for future issuance. The
Company may issue shares of Common Stock beyond those already issued for cash,
services, or as further employee incentives. To the extent that additional
shares of Common Stock or Preferred Stock are issued, the percentage of the
Company's issued and outstanding shares of stock shall be increased and the
issuance may cause dilution in the book value per share.
DIVIDENDS NOT LIKELY. No dividends on the Company's Common Stock have
been declared or paid by the Company to date. The Company does not presently
intend to pay dividends on shares for the foreseeable future, but intends to
retain all earnings, if any, for use in the Company's business. There can be no
assurance that dividends will ever be paid on the Common Stock of the Company.
RISKS ASSOCIATED WITH NEW PRODUCTS AND NEW MARKETS. The business of
producing oil and natural gas from proven reserves is characterized by rapid
technological changes, changing customer requirements, frequent service and
product enhancements and introductions, and emerging industry standards. The
introduction of services or products embodying new technologies and the
emergence of new industry standards can render existing services or products
obsolete and unmarketable. The Company's future success will depend, in part, on
its ability to develop and use new technologies, respond to technological
advances, enhance its existing services and products and, develop new services
and products on a timely and cost-effective basis. There can be no assurance
that the Company will be successful in effectively developing or using new
technologies, responding to technological advances or developing, introducing or
marketing service and product enhancements or new services and products. In
addition, the Company may enter into new markets in connection with enhancing
its existing services and products and developing new services and products.
There can be no assurance that the Company will be successful in pursuing new
opportunities or will compete successfully in any new markets.
SUBSTANTIAL COMPETITION. A number of the Company's competitors have
significantly greater financial, technical, administrative, manufacturing,
marketing and other resources than the Company. Some of the our competitors also
offer a wider range of services and products than us and have greater name
recognition and more extensive customer bases than we do. These competitors may
be able to respond more quickly to new or changing opportunities and
technologies than we can. Moreover, current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties or may consolidate to enhance their services and products. We
expect that new competitors or alliances among competitors will emerge and may
acquire significant market share.
The Company must overcome significant barriers to enter into the business of
producing oil and natural gas from proven reserves a result of its limited
operating history. Many of its competitors have substantially greater financial,
technical, managerial and marketing resources, longer operating histories and
greater name recognition. Such competitors may be able to devote more resources
to developing oil and gas production than our Company. There can be no assurance
that the Company will be able to compete effectively with current or future
competitors or that the competitive pressures faced by the Company will not have
a material adverse effect on the Company's business, financial condition and
operating results.
RISKS ASSOCIATED WITH STRATEGIC ACQUISITIONS AND RELATIONSHIPS. The
Company has pursued and may in the future pursue strategic acquisitions of
complimentary businesses and technologies. Acquisitions entail numerous risks,
including difficulties in the assimilation of acquired operations and products,
diversion of management's attention to other business concerns, amortization of
acquired intangible assets, and potential loss of key employees of acquired
companies. There can be no assurance that the Company will be able to integrate
successfully any operations, personnel, services or products that might be
acquired in the future or that any acquisition will enhance the Company's
business, financial condition or operating results.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
No court or governmental agency has assumed jurisdiction over any substantial
part of the Company's business or assets.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
There has been no change in accountants.
ITEM 5. OTHER EVENTS
SUCCESSOR ISSUER ELECTION. Pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, the Company elected to
become the successor issuer to Segway II Corp. for reporting purposes under the
Securities Exchange Act of 1934 and elects to report under the Act effective
April 26, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
No directors have resigned due to a disagreement with the Company since the date
of the last annual meeting of shareholders.
ITEM 7. FINANCIAL STATEMENTS
The audited consolidated financial statements for the year ending December 31,
1999 and reviewed consolidated financial statements for the quarter ending March
31, 2000 are filed herewith.
ITEM 8. CHANGE IN FISCAL YEAR
There has been no change in the Company's fiscal year.
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
MARCH 31, 2000
TABLE OF CONTENTS
PAGE
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Independent Auditor's Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to the Financial Statements 6-8
The Board of Directors
Pangea Petroleum Corporation
6666 Harwin, Suite 545
Houston, Texas 77036
I have reviewed the accompanying balance sheet of Pangea Petroleum Corporation
as of March 31, 2000 the related statements of operation and accumulated
deficit, stockholder's equity, and cash flows for the three month period then
ended, in accordance with Statements for Accounting and Review Services issued
by the American Institute of Certified Public Accountants. All information
included in these financial statements is the representation of the management
of Pangea Petroleum Corporation.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modification that should be
made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming Pangea
Petroleum Corporation will continue as a going concern. As shown in the
financial statements, the Company has a deficit accumulated during the
development stage of $497,874. The Company has operated as a development stage
enterprise since its inception by devoting substantially all of its efforts to
financial planning and raising capital. These conditions raise substantial doubt
about the Company's continued existence. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
April 27, 2000
James J. Taylor,
Certified Public Accountant
New Braunfels, Texas
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2000
ASSETS
Current Assets:
Cash $ 38,450
Accounts receivable:
Trade 36,619
Employees 11,841
Less - Allowance for doubtful accounts (29,868)
---------
Net accounts receivable 18,592
Real estate for investment (at cost) 46,642
Excess payroll tax withholding 70
Deferred tax asset 82,858
---------
Total current assets 186,612
---------
Fixed Assets:
Office equipment 15,245
Worldlink equipment 61,000
Oil and gas property 58,000
Less - Accumulated depreciation (17,247)
---------
Net fixed assets 116,998
---------
Other Assets:
Deposits 988
Radio advertising credits 1,000
Worldlink goodwill 100,000
Organization expense (net of $283 amortization) 192
---------
Net other assets 102,180
---------
Total Assets $ 405,790
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $91,867
Accrued interest payable 10,581
Sales taxes payable 539
---------
Total current liabilities 102,987
Long-Term Liabilities
Note payable to related company 162,000
---------
Other Liabilities:
Accounts payable - affiliated companies 308,120
---------
Total liabilities 573,107
---------
Stockholders' Equity:
Common stock ($0.001 par value, 50,000,000 shares authorized,
19,280,500 shares issued and outstanding at March 31, 2000) 19,280
Additional paid in capital 311,277
Deficit accumulated during the development stage (497,874)
---------
Total stockholders' equity (167,317)
---------
Total Liabilities and Stockholders' Equity $ 405,790
=========
See Accountant's Report and Notes to Financial Statements
-2-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATION AND ACCUMULATED DEFICIT
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
Revenues:
Advertising income $516
Operating Expenses:
Amortization expense 25
Bank charges 27
Depreciation expense 4,474
Delivery and postage 43
Medical insurance 4,721
Legal and professional expense 26,645
Stock registration fees 11,370
PR newswire 400
Late payment fees 79
Meals and entertainment 773
Office expense 221
Payroll tax expense 3,988
Salaries expense 39,625
Supplies 1,731
Telephone expense 885
Travel expense 6,151
Production expense 3,480
-------------
Total operating expenses 104,638
-------------
Net Income (Loss) from Operations (104,122)
Other Income (Expenses):
Interest income 0
Interest expense (3,231)
-------------
Total other income (expense) (3,231)
-------------
Net Income (Loss) before Income Tax Benefit (107,353)
Income tax benefit 17,597
-------------
Net Income (Loss) (89,756)
Accumulated deficit, beginning of period (408,118)
-------------
Accumulated Deficit, End of Period ($497,874)
=============
(Loss) per Share of Common Stock Outstanding ($0.0049)
=============
Weighted Average of Common Stock Shares Outstanding 18,503,763.74
=============
See Accountant's Report and Notes to Financial Statements
-3-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OF JANUARY 1, 1998 to MARCH 31, 2000
DEFICIT
ACCUMULATED
ADDITIONAL DURING
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
Balances January 1, 1998 410,000 $410 $15,895 ($15,526) $779
Issuance of stock
for services 12,000 12 1,488 1,500
Record 14 for 1
forward stock split 5,486,000 5,486 (5,486) 0
Record 3 for 1
forward stock split 11,816,000 11,816 (11,816) 0
Net loss for period (1,962) (1,962)
---------------------------------------------------------------------------------
Balances December 31, 1998 17,724,000 $17,724 $81 ($17,488) $317
Stock sold July 1, 1999 50,000 50 49,950 50,000
Stock traded July 1, 1999
for oil and gas property 35,000 35 34,965 35,000
Net loss for period (390,630) (390,630)
---------------------------------------------------------------------------------
Balances December 31, 1999 17,809,000 $17,809 $84,996 ($408,118) ($305,313)
Stock sold Jan.- March, 2000 1,471,500 1,471 226,281 227,752
Net loss for period (89,756) (89,756)
---------------------------------------------------------------------------------
Balances March 31, 2000 19,280,500 $19,280 $311,277 ($497,874) ($167,317)
=================================================================================
See Accountant's Report and Notes to Financial Statements
-4-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
Cash Flows from Operating Activities
Net loss ($89,756)
Adjustment to reconcile net loss to net cash used in operating activities:
Amortization 25
Depreciation 4,474
(Increase) in current assets (74,892)
(Decrease) in current liabilities (13,496)
---------
Net cash used in operating activities (173,645)
Cash Flows from Investing Activities:
(Purchases) of fixed assets (23,000)
Net cash provided (utilized) by investing activities (23,000)
---------
Cash Flows from Financing Activities:
Proceeds from related company loans 7,000
Proceeds from sales of common stock 1,471
---------
Additional paid-in capital 226,281
---------
Net cash provided (utilized) by financing activities 234,752
---------
Net Increase in Cash and Equivalents 38,107
Cash and equivalents, beginning of period 343
---------
Cash and Equivalents, end of Period $38,450
=========
See Accountant's Report and Notes to Financial Statements
-5-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Note 1 - Going Concern
As shown in the accompanying balance sheet, the Company has a negative
deficit accumulated during the development stage in the amount of
$408,118. As discussed below, the Company has operated as a development
stage enterprise since its inception, March 11, 1997. The Company has
devoted substantially all of its efforts to financial planning, raising
capital, and developing markets. These factors create an uncertainty
about the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that might be
necessary, if the Company is unable to continue as a going concern.
Note 2 - Company History
Zip Top, Inc. (the Company), a Colorado Corporation, was incorporated
March 11, 1997. The Company's purpose is the manufacturing, marketing
and distributing a specialized line of kitchen accessories based on the
Zip to , a multipurpose bottle and jar opener made of natural rubber
and first sold in the 1950's.
The Company has operated as a development stage enterprise since its
inception by devoting substantially all of its efforts to product
development, market development and raising capital to support these
efforts.
On December 11, 1998, the Company name was officially changed to Pangea
Petroleum Corporation. The name change was based on the decision for
the company to be primarily engaged in the acquisition, development,
production, and exploration for, and the sale of petroleum products.
This entry into the petroleum industry never came to pass.
In May of 1999, Pangea Petroleum Corporation purchased the assets of
WorldLink, USA, Inc. a Houston, Texas based internet company, from the
Federal Bankruptcy Court, Southern District of Texas. The purchase
price was booked at $162,000 for the assets, deposits, and goodwill.
Pangea Petroleum Corporation assumed the management of WorldLink in
June of 1999. During the period of June, 1999, through September, 1999,
WorldLink obtained several sponsors to provide live concerts to the
public through the internet. Two concerts were produced as planned, but
deemed to be failures because of the lower than expected number of
viewers and anticipated advertising revenues. Some of the sponsors have
not paid their fees because of the failures.
At this point, Pangea Petroleum Corporation purged the management and
most of the Company staff. New directions and strategic goals were put
into place for the Company by the new management. The sale of WorldLink
became a primary goal (see subsequent events note).
Note 3 - Summary of Significant Accounting Policies
This summary of significant accounting policies of Pangea Petroleum
Corporation is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of management, who is responsible for their integrity
and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in
the preparation of the financial statements.
(Continued)
-6-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Note 3 - Summary of Significant Accounting Policies (Continued) Basis of
Accounting - The financial statements of the Company are prepared using
the accrual basis of accounting where as revenues are recognized when
earned and expenses recognized when incurred.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
Cash and Cash Equivalents - The Company considers all highly liquid
investments purchased with an original maturity of three months or less
to be cash equivalents.
Property and Equipment - Property and equipment are recorded at cost,
less accumulated depreciation. Additions, renewals, and betterments are
capitalized, whereas expenditures for maintenance and repairs are
expressed. The costs and related accumulated depreciation of assets
retired or sold are removed from the appropriate asset and depreciation
accounts, and the resulting gain or loss is reflected in income. It is
the policy of the Company to depreciate using accelerated methods for
both financial reporting and tax purposes at rates based on the
following useful lives:
Years
-----
Office equipment 7
WorldLink equipment 7
Organization Costs - Costs incurred in organizing the Company are being
amortized over a sixty month period.
Federal Income Taxes - The Company has adopted the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" to account for income taxes. This
statement requires the establishment of a deferred tax asset or
liability for the recognition of future deductible or taxable amounts
and operating loss and tax credit carryforwards. Deferred tax expense
or benefit is recognized as a result of the changes in the assets and
liabilities during the year. The amount and timing of the reversal of
the differences are estimated and actual amounts may differ from these
amounts.
Comparative Financial Information - The December 31, 1998 financial
information is presented for comparative purposes only.
Earnings per Share - Earnings per share is calculated by dividing the
net loss for the period by the weighted average number of common shares
outstanding.
Note 4 - Related Party Debt
The Company's related party debt consists of two types liabilities.
Related party is defined as a company with common ownership or a major
stockholder. Pangea Petroleum Corporation has the following debts at
December 31, 1999:
(Continued)
-7-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Note 4 - Related Party Debt (Continued):
Account Payable - Affiliated Companies - This account balance consists
of an accumulation of advances made by related parties for the purpose
of funding operating expenses and normal costs of doing business.
Note Payable to Related Company - This account consists of the advance
for the purchase price of the WorldLink USA, Inc. assets. It is
supported by a demand note in the amount of $162,000 dated June 7,
1999, and payable to Rapid Release Research, LLC. This note is secured
by a security interest in and to the equipment, accounts receivable and
inventory associated with WorldLink USA, Inc. Interest on this
instrument is accrued at the stated rate of eight (8) percent through
March 31, 2000.
Note 5 - Oil and Gas Property
On July 1, 1999, the Company acquired a non-producing South Texas oil
and gas property in exchange for common stock. This property is in the
development process, and therefore, has no known production nor
reserves. It is therefore carried on the Company's books at the value
at acquisition or $35,000.
On March 9, 2000, the company entered into a contract to drill and
develop oil and gas prospects on certain oil and gas leases in Webb
County, Texas at a cost of $23,000, as of March 31, 2000.
Note 6 - Subsequent Events
In December, 1999, verbal offers for the WorldLink USA, Inc. were
received and negotiations pursued. This sale to Paradigm Advanced
Technologies was approved, and negotiations continue to date.
On April 26, 2000, Pangea Petroleum Corporation and Segway II corp.
entered into an agreement for Pangea to acquire all of the outstanding
shares of Segway at a cost of $75,000 and 5,000 shares of Pangea common
stock and is to be closed as soon as possible.
-8-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
DECEMBER 31, 1999 and 1998
TABLE OF CONTENTS
PAGE
----
Independent Auditor's Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3-4
Statement of Stockholders' Equity 5
Statement of Cash Flows 6
Notes to the Financial Statements 7-9
Independent Auditor's Report
To The Board of Directors
Pangea Petroleum Corporation
6666 Harwin, Suite 545
Houston, Texas 77036
I have audited the accompanying balance sheet of Pangea Petroleum Corporation (a
development stage company) as of December 31, 1999, and the related statement of
operations, changes in stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit. The financial statements of Pangea Petroleum Corporation as of
December 31, 1998 were not prepared by me, and accordingly, I do not express an
opinion on these statements, nor do I offer any other assurance on them.
I have conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Pangea Petroleum Corporation as of
December 31, 1999, and the results of its operations and cash flows for the year
then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming Pangea
Petroleum Corporation will continue as a going concern. As shown in the
financial statements, the Company has a deficit accumulated during the
development stage of $408,118. The Company has operated as a development stage
enterprise since its inception by devoting substantially all of its efforts to
financial planning and raising capital. These conditions raise substantial doubt
about the Company's continued existence. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
James J. Taylor,
Certified Public Accountant
New Braunfels, Texas
February 15, 2000
-1-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1999 and 1998
1999 1998
---- ----
ASSETS
Current Assets:
Cash $ 343 $ 0
Accounts receivable:
Trade 36,619
Employees 1,258
Less - Allowance for doubtful accounts (29,868)
--------
Net accounts receivable 8,009
Deferred tax asset 65,261
-------- --------
Total current assets 73,613 0
-------- --------
Fixed Assets:
Office equipment 15,245
Worldlink equipment 61,000
Oil and gas property 35,000
Less - Accumulated depreciation (12,774)
-------- --------
Net fixed assets 98,471 0
-------- --------
Other Assets:
Deposits 988
Radio advertising credits 1,000
Worldlink goodwill 100,000
Organization expense (net of $283 amortization) 217 317
-------- --------
Net other assets 102,205 317
-------- --------
Total Assets $274,289 $ 317
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank overdraft $ 5,931 $ 0
Accounts payable - trade 51,052
Accrued interest payable 7,350
Payroll taxes accrued and withheld 51,611
Sales taxes payable 539
-------- --------
Total current liabilities 116,483 0
Long-Term Liabilities
Note payable to related company 162,000 0
-------- --------
Other Liabilities:
Accounts payable - affiliated companies 301,119
-------- --------
Total liabilities 579,602 0
-------- --------
Stockholders' Equity:
Common stock ($0.001 par value, 50,000,000 shares authorized,
17,809,000 shares outstanding at December 31, 1999,
17,724,000 shares outstanding at December 31, 1998 17,809 17,724
Additional paid in capital 84,996 81
Deficit accumulated during the development stage (408,118) (17,488)
-------- --------
Total stockholders' equity (305,313) 317
-------- --------
Total Liabilities and Stockholders' Equity $274,289 $ 317
======== ========
See Accountant's Report and Notes to Financial Statements
-2-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATION
FOR THE YEARS ENDED DECEMBER 31, 1999 and 1998
1999 1998
---- ----
Revenues:
Web hosting and e-mail services $ 2,528 $ 0
Advertising income 751
Production income 30,151
-------- --------
Total income 33,430 0
Cost of Sales:
Direct cost of sales 2,008 0
Direct cost of sales - Hawaii 57,385
-------- --------
Total cost of sales 59,393 0
-------- --------
Gross Profit (Loss) (25,963) 0
Operating Expenses:
Advertising 900
Amortization expense 100 100
Bad debts 29,869
Bank charges 576 12
Charitable contributions 5,000
Contracted services 33,262
Depreciation expense 12,774
Dues and subscriptions expense 1,925
Employee benefit programs expense 1,403
Delivery and postage 581
Gift expense 52
Medical insurance 7,067
Property insurance 2,500
Legal and professional expense 24,793
Consultants/contract labor 14,650 1,872
Stock transfer fees 4,005
Stock registration fees 6,000
PR newswire 5,740
Late payment fees 57
Licenses expense 505
Maintenance expense 1,267
Meals and entertainment 1,269
Office expense 6,169
Office expense - software/equipment 10,145
Payroll tax expense 14,567
Worldlink payroll tax expense 3,344
Rent or lease expense 19,922
Repairs 3,597
Salaries expense 154,674
Supplies 7,385
Telephone expense 7,543
Telephone expense - cell phone 4,761
Telephone maintenance 6,731
Travel expense 21,945
Production expense 7,500
-------- --------
Total operating expenses 422,578 1,984
-------- --------
Net Income (Loss) from Operations ($448,541) ($ 1,984)
(Continued)
See Accountant's Report and Notes to Financial Statements
-3-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATION (Continued)
FOR THE YEARS ENDED DECEMBER 31, 1999 and 1998
1999 1998
---- ----
Net Income (Loss) from Operations ($448,541) ($1,984)
Other Income (Expenses):
Interest income 0 22
Interest expense (7,350)
---------- ----------
Total other income (expense) (7,350) 22
---------- ----------
Net Income (Loss) before Income Tax Benefit (455,891) (1,962)
Income tax benefit 65,261 0
---------- ----------
Net Income (Loss) (390,630) (1,962)
Accumulated deficit, beginning of period (17,488) (15,526)
---------- ----------
Accumulated Deficit, End of Period ($408,118) ($17,488)
========== ==========
(Loss) per Share of Common Stock Outstanding ($0.0220) ($0.0001)
========== ==========
Weighted Average of Common Stock Shares Outstanding 17,766,849 17,572,109
========== ==========
See Accountant's Report and Notes to Financial Statements
-4-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OF JANUARY 1, 1998 to DECEMBER 31, 1999
DEFICIT
ACCUMULATED
ADDITIONAL DURING
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
Balances January 1, 1998 410,000 $410 $15,895 ($15,526) $779
Issuance of stock
for services 12,000 12 1,488 1,500
Record 14 for 1
forward stock split 5,486,000 5,486 (5,486) 0
Record 3 for 1
forward stock split 11,816,000 11,816 (11,816) 0
Net loss for period (1,962) (1,962)
---------- ------- ------- -------- --------
Balances December 31, 1998 17,724,000 $17,724 $81 ($17,488) $317
Stock sold July 1, 1999 50,000 50 49,950 50,000
Stock traded July 1, 1999
for oil and gas property 35,000 35 34,965 35,000
Net loss for period (390,630) (390,630)
------------------------------------------------------------------------------------------
Balances December 31, 1999 17,809,000 $17,809 $84,996 ($408,118) ($305,313)
========== ======= ======= ======== ========
See Accountant's Report and Notes to Financial Statements
-5-
PANGEA PETROLEUM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 and 1998
1999 1998
---- ----
Cash Flows from Operating Activities
Net loss ($390,630) ($1,962)
Adjustment to reconcile net loss to net cash used in operating activities:
Amortization 100 100
Stock issued for services 1,500
Depreciation 12,774
(Increase) in current assets (73,270)
Increase in current liabilities 116,483
-------- ------
Net cash used in operating activities (334,543) (362)
Cash Flows from Investing Activities:
(Purchases) of equipment (76,245) 0
(Increase) in deposits (1,988)
(Increase) in goodwill (100,000)
-------- ------
Net cash provided (utilized) by investing activities (178,233) 0
-------- ------
Cash Flows from Financing Activities:
Proceeds from related company notes 162,000 0
Proceeds from related company loans 301,119
Proceeds from sales of common stock 50
Additional paid-in capital 49,950
-------- ------
Net cash provided (utilized) by financing activities 513,119 0
-------- ------
Net Increase in Cash and Equivalents 343 (362)
Cash and equivalents, beginning of period 0 362
-------- ------
Cash and Equivalents, end of Period $ 343 $ 0
======== ======
See Accountant's Report and Notes to Financial Statements
-6-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 1 - Going Concern
As shown in the accompanying balance sheet, the Company has a negative
deficit accumulated during the development stage in the amount of
$408,118. As discussed below, the Company has operated as a development
stage enterprise since its inception, March 11, 1997. The Company has
devoted substantially all of its efforts to financial planning, raising
capital, and developing markets. These factors create an uncertainty
about the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that might be
necessary, if the Company is unable to continue as a going concern.
Note 2 - Company History
Zip Top, Inc. (the Company), a Colorado Corporation, was incorporated
March 11, 1997. The Company's purpose is the manufacturing, marketing
and distributing a specialized line of kitchen accessories based on the
Zip to , a multipurpose bottle and jar opener made of natural rubber
and first sold in the 1950's.
The Company has operated as a development stage enterprise since its
inception by devoting substantially all of its efforts to product
development, market development and raising capital to support these
efforts.
On December 11, 1998, the Company name was officially changed to Pangea
Petroleum Corporation. The name change was based on the decision for
the company to be primarily engaged in the acquisition, development,
production, and exploration for, and the sale of petroleum products.
This entry into the petroleum industry never came to pass.
In May of 1999, Pangea Petroleum Corporation purchased the assets of
WorldLink, USA, Inc. a Houston, Texas based internet company, from the
Federal Bankruptcy Court, Southern District of Texas. The purchase
price was booked at $162,000 for the assets, deposits, and goodwill.
Pangea Petroleum Corporation assumed the management of WorldLink in
June of 1999. During the period of June, 1999, through September, 1999,
WorldLink obtained several sponsors to provide live concerts to the
public through the internet. Two concerts were produced as planned, but
deemed to be failures because of the lower than expected number of
viewers and anticipated advertising revenues. Some of the sponsors have
not paid their fees because of the failures.
At this point, Pangea Petroleum Corporation purged the management and
most of the Company staff. New directions and strategic goals were put
into place for the Company by the new management. The sale of WorldLink
became a primary goal (see subsequent events note).
Note 3 - Summary of Significant Accounting Policies
This summary of significant accounting policies of Pangea Petroleum
Corporation is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of management, who is responsible for their integrity
and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in
the preparation of the financial statements.
(Continued)
-7-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 3 - Summary of Significant Accounting Policies (Continued)
Basis of Accounting - The financial statements of the Company are
prepared using the accrual basis of accounting where as revenues are
recognized when earned and expenses recognized when incurred.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
Cash and Cash Equivalents - The Company considers all highly liquid
investments purchased with an original maturity of three months or less
to be cash equivalents.
Property and Equipment - Property and equipment are recorded at cost,
less accumulated depreciation. Additions, renewals, and betterments are
capitalized, whereas expenditures for maintenance and repairs are
expensed. The costs and related accumulated depreciation of assets
retired or sold are removed from the appropriate asset and depreciation
accounts, and the resulting gain or loss is reflected in income. It is
the policy of the Company to depreciate using accelerated methods for
both financial reporting and tax purposes at rates based on the
following useful lives:
Years
-----
Office equipment 7
WorldLink equipment 7
Organization Costs - Costs incurred in organizing the Company are being
amortized over a sixty month period.
Federal Income Taxes - The Company has adopted the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" to account for income taxes. This
statement requires the establishment of a deferred tax asset or
liability for the recognition of future deductible or taxable amounts
and operating loss and tax credit carryforwards. Deferred tax expense
or benefit is recognized as a result of the changes in the assets and
liabilities during the year. The amount and timing of the reversal of
the differences are estimated and actual amounts may differ from these
amounts.
Comparative Financial Information - The December 31, 1998 financial
information is presented for comparative purposes only.
Earnings per Share - Earnings per share is calculated by dividing the
net loss for the period by the weighted average number of common shares
outstanding.
Note 4 - Related Party Debt
The Company's related party debt consists of two types liabilities.
Related party is defined as a company with common ownership or a major
stockholder. Pangea Petroleum Corporation has the following debts at
December 31, 1999:
(Continued)
-8-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 4 - Related Party Debt (Continued):
Account Payable - Affiliated Companies - This account balance consists
of an accumulation of advances made by related parties for the purpose
of funding operating expenses and normal costs of doing business. The
Company's working capital position has deteriorated significantly
during 1999. At December 31, 1999, the Company's liabilities are
substantially in excess of its assets. The deterioration of working
capital was caused by losses from operations and write-offs of accounts
receivable deemed uncollectible. The Company continues to fund its
working capital through advances from the related parties.
Note Payable to Related Company - This account consists of the advance
for the purchase price of the WorldLink USA, Inc. assets. It is
supported by a demand note in the amount of $162,000 dated June 7,
1999, and payable to Rapid Release Research, LLC. This note is secured
by a security interest in and to the equipment, accounts receivable and
inventory associated with WorldLink USA, Inc. Interest on this
instrument is accrued at the stated rate of eight (8) percent through
December 31, 1999.
Note 5 - Oil and Gas Property
On July 1, 1999, the Company acquired a non-producing South Texas oil
and gas property in exchange for common stock. This property is in the
development process, and therefore, has no known production nor
reserves. It is therefore carried on the Company's books at the value
at acquisition or $35,000.
Note 6 - Subsequent Events
In December, 1999, verbal offers for the WorldLink USA, Inc. were
received and negotiations pursued. This sale to Paradigm Advanced
Technologies was approved, with formal documentation to pe presented to
the Company on March 1, 2000.
At a meeting of the Board of Directors in January, 2000, the board
approved the conversion of Rapid Release Research, LLC. And Martin R.
Nathan and Assoc1iates debt to Pangea Petroleum Corporation stock.
-9-
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors
Pangea Petroleum Corporation
6666 Harwin, Suite 545
Houston, Texas 77036
I have reviewed the pro forma adjustments reflecting the event described in Note
1 and the application of those adjustments to the historical amounts in the
accompanying pro forma balance sheet of Pangea Petroleum Corporation as of April
26, 2000, and the pro forma statement of operations for the three month period
then ended. These historical financial statements are derived from the March 31,
2000 historical financial statements of Pangea Petroleum Corporation, which were
reviewed by me, and the audited financial statements of Segway II Corp. as of
January 31, 2000, which were audited by Varma and Associates, Certified Public
Accountants. My review was conducted in accordance with standards established by
the American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective of
which is the expression of an opinion on management's assumptions, the pro forma
adjustments , and the application of those adjustments to historical
information. Accordingly, I do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effect s on the historical information might have been had the event
described in Note 1 had occurred at an earlier date. However, the pro forma
financial statements are not necessarily indicative of the results of operations
or related effects on financial position that wold have been attained had the
above mentioned event actually occurred earlier.
Based on my review, nothing came to my attention that caused me to believe that
management's assumptions do not provide a reasonable bases for presenting the
significant effects directly attributable to the above mentioned event described
in Note 1, that the related pro forma adjustments do not give appropriate effect
to those assumptions, or that the pro forma column does not reflect the proper
application of those adjustments to the historical financial statement amounts
in the pro forma balance sheet as of March 31, 2000, and the pro forma statement
of operations for the three months then ended.
April 27, 2000
James J. Taylor,
Certified Public Accountant
New Braunfels, Texas
PANGEA PETROLEUM CORPORATION
PRO FORMA BALANCE SHEET
MARCH 31, 2000
PANGEA SEGWAY COMBINED
------ ------ --------
ASSETS
Current Assets:
Cash $38,450 $500 $38,950
Accounts receivable:
Trade 36,619 36,619
Employees 11,841 11,841
Less - Allowance for doubtful accounts (29,868) (29,868)
-----------------------------------
Net accounts receivable 18,592 0 18,592
Real estate for investment (at cost) 46,642 46,642
Excess payroll tax withholding 70 70
Deferred tax asset 82,858 82,858
-----------------------------------
Total current assets 186,612 500 187,112
-----------------------------------
Fixed Assets:
Office equipment 15,245 15,245
Worldlink equipment 61,000 61,000
Oil and gas property 58,000 58,000
Less - Accumulated depreciation (17,247) (17,247)
-----------------------------------
Net fixed assets 116,998 0 116,998
-----------------------------------
Other Assets:
Deposits 988 988
Radio advertising credits 1,000 1,000
Purchased company 75,000 75,000
Worldlink goodwill 100,000 100,000
Organization expense (net of $283 amortization) 192 192
-----------------------------------
Net other assets 177,180 177,180
-----------------------------------
Total Assets $480,790 $500 $481,290
===================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $166,867 150 167,017
Accrued interest payable 10,581 10,581
Sales taxes payable 539 539
-----------------------------------
Total current liabilities 177,987 150 178,137
Long-Term Liabilities
Note payable to related company 162,000 162,000
-----------------------------------
Other Liabilities:
Accounts payable - affiliated companies 308,120 308,120
-----------------------------------
Total liabilities 648,107 150 648,257
-----------------------------------
Stockholders' Equity:
Common stock ($0.001 par value, 50,000,000 shares authorized,
19,285,500 shares issued and outstanding) 19,280 500 19,780
Additional paid in capital 311,277 311,277
Deficit accumulated (497,874) (150) (498,024)
-----------------------------------
Total stockholders' equity (167,317) 350 (166,967)
-----------------------------------
Total Liabilities and Stockholders' Equity $480,790 $500 $481,290
===================================
See Accountant's Pro Forma Report and Note to Pro Forma Statements
-2-
PANGEA PETROLEUM CORPORATION
PRO FORMA STATEMENT OF OPERATION
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
PANGEA SEGWAY COMBINED
------ ------ --------
Revenues:
Advertising income $516 $0 $516
Operating Expenses:
Amortization expense 25 0 25
Bank charges 27 27
Depreciation expense 4,474 4,474
Delivery and postage 43 43
Medical insurance 4,721 4,721
Legal and professional expense 26,645 150 26,795
Stock registration fees 11,370 11,370
PR newswire 400 400
Late payment fees 79 79
Meals and entertainment 773 773
Office expense 221 221
Payroll tax expense 3,988 3,988
Salaries expense 39,625 39,625
Supplies 1,731 1,731
Telephone expense 885 885
Travel expense 6,151 6,151
Production expense 3,480 3,480
-----------------------------------------
Total operating expenses 104,638 150 104,788
-----------------------------------------
Net Income (Loss) from Operations (104,122) (150) (104,272)
Other Income (Expenses):
Interest income 0 0
Interest expense (3,231) (3,231)
-----------------------------------------
Total other income (expense) (3,231) 0 (3,231)
-----------------------------------------
Net Income (Loss) before Income Tax Benefit (107,353) (107,503)
Income tax benefit 17,597 0 17,597
-----------------------------------------
Net Income (Loss) (89,756) (150) (89,906)
Accumulated deficit, beginning of period (408,118) 0 (408,118)
-----------------------------------------
Accumulated Deficit, End of Period ($497,874) ($150) ($498,024)
=========================================
See Accountant's Pro Forma Report and Note to Pro Forma Statements
-3-
PANGEA PETROLEUM CORPORATION
(A Development Stage Company)
Note to Pro Forma Financial Statements
March 31, 2000
Note 1 - Acquisition of Company
On April 26, 2000, an agreement was entered into by Pangea Petroleum
Corporation and Segway II Corp. for Pangea to acquire all of the assets
and equity of Segway. The agreement called for a cash payment of
$75,000 and 5,000 shares of $0.001 par value stock of Pangea in
exchange for all of the assets and equity of Segway. These statements
are based on the transaction having taken place on March 31, 2000, and
utilize the reviewed financial statements of Pangea Petroleum
Corporation as of that date by James J. Taylor, Certified Public
Accountant, combined with the audited financial statements of Segway II
Corp. audited by Varma and Associates, Certified Public Accountants.
The resulting pro forma statements reflect the effect on those
historical financial statements.
Index to Exhibits
2.1 Stock Acquisition and Reorganization Agreement by and among Pangea
Petroleum Corp and Segway II Corp. dated April 26, 2000.
3.1 Articles of Incorporation of Pangea Petroleum Corp. as amended.
3.2 By-Laws of Pangea Petroleum Corp.
17.1 Resignation Letter of Richard I. Anslow
27.1. Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Pangea Petroleum Corp.,
a Colorado corporation
DATED: April 28, 2000
/s/ Charles B. Pollock
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Charles B. Pollock
Chief Executive Officer